3. Overview
of
this
Business
Case
for
Peering
Sec6on
• “For
the
CFO,
keep
it
simple”
– When
does
peering
make
sense
financially?
– Don’t
convince,
prove.
– “Tell
me
again
why
I
should
burn
a
port
for
free
peering
when
I
could
make
revenue
off
of
it?”
• Bryan
Garre?
(BellSouth)
story
– Used
internally
– Reviewed
quarterly
– External
exper6se
3
4. The
Cost
of
Peering
in
Germany
Assumptions Far
Transport into IX: $6,000 per month
Colocation Fees: $1,000 per month
Peering Fees: $2,000 per month
Equipment Costs: $2,000 per month
Total Cost of Peering: $11,000 per month
Transport
into
DE-‐CIX
$2000/mo
local
$4000/mo
nearby
$6000/mo
far
4
5. Cost
of
Internet
Peering
Mbps Exchanged Peering Cost
Assumptions Far
Transport into IX: $6,000 per month 100 Mbps $110.00 per Mbps
Colocation Fees:
Peering Fees:
$1,000
$2,000
per month
per month
200 Mbps $55.00 per Mbps
Equipment Costs: $2,000 per month 300 Mbps $36.67 per Mbps
Total Cost of Peering: $11,000 per month
400 Mbps $27.50 per Mbps
500 Mbps $22.00 per Mbps
600 Mbps $18.33 per Mbps
700 Mbps $15.71 per Mbps
800 Mbps $13.75 per Mbps
900 Mbps $12.22 per Mbps
Cost
of
Peering
allocated
across
the
amount
1000 Mbps $11.00 per Mbps
of
traffic
peered
for
free.
1100 Mbps $10.00 per Mbps
1200 Mbps $9.17 per Mbps
1300 Mbps $8.46 per Mbps
1400 Mbps $7.86 per Mbps
1500 Mbps $7.33 per Mbps
1600 Mbps $6.88 per Mbps
1700 Mbps $6.47 per Mbps
1800 Mbps $6.11 per Mbps
5
6. 4
Internet
Peering
Metrics
• All
of
these
metrics
are
variants
of
Does
Peering
make
sense?
1. Peering
Break
Even
Point:
How
much
traffic
do
I
have
to
peer
for
free
to
save
enough
money
to
cover
the
cost
of
peering?
2. EffecGve
Peering
Bandwidth:
What
is
the
maximum
amount
of
traffic
I
can
realis6cally
push
through
peering
infrastructure?
3. Minimum
Cost
of
Traffic
Exchange:
When
I
max
out
peering,
what
will
be
the
best
case
scenario
cost
of
peering?
4. EffecGve
Peering
Range:
Where
is
the
peering
sweet
spot,
when
peering
proves
financially
ra6onal?
6
7. Peering
Breakeven
Point
• DefiniGon:
The
Peering
Break
Even
Point
is
the
point
where
the
unit
cost
of
peering
exactly
equals
the
unit
price
of
Internet
Transit.
• Example
use:
“If
we
can
peer
at
least
3Gbps
it
will
save
us
money
to
peer.”
MonthlyCostOfPeering
CostOfPeering =
# MbpsExchanged
MonthlyCostOfPeering
PeeringBreakEvenPo int =
Unit Pr iceOfTransit
7
8. Applica6on
of
Peering
Breakeven
Point
• “If
you
can
peer
3143Mbps
I
can
prove
to
you
it
makes
sense
to
build
in”
Assumptions Far Near Local
Transport into IX: $6,000 per month $4,000 per month $2,000 per month
Colocation Fees: $1,000 per month $1,000 per month $1,000 per month
Peering Fees: $2,000 per month $2,000 per month $2,000 per month
Equipment Costs: $2,000 per month $2,000 per month $2,000 per month
Total Cost of Peering: $11,000 per month $9,000 per month $7,000 per month
market price at origin $3.50 per Mbps $3.50 per Mbps $3.50 per Mbps
market price at dest $2.00 per Mbps $2.00 per Mbps $2.00 per Mbps
peeringBreakEven (Mbps) 3143 Mbps 2571 Mbps 2000 Mbps
minCostOfTraffic ($/Mbps) $1.57 $1.29 $1.00
8
9. Effec6ve
Peering
Bandwidth
• DefiniGon:
The
EffecGve
Peering
Bandwidth
is
the
maximum
amount
of
traffic
that
can
be
safely
transported
(without
packet
los)
across
a
peering
infrastructure.
• In
prac6ce,
about
70%
• Effec6ve
Peering
Bandwidth=70%
*
Thinnest
Pipe
• i.e.
EPB
of
10G
is
7Gbps
9
10. Minimum
Cost
of
Traffic
Exchange
• DefiniGon:
The
Minimum
Cost
for
Traffic
Exchange
is
the
lowest
unit
cost
obtainable
in
a
peering
infrastructure
deployment.
• Example
use:
“If
we
max
out
peering
we
will
pay
$1/
Mbps
for
that
traffic.”
$11, 000 perMonth
minimumCostOfTrafficExchange = = $1.57perMbps
7000Mbps 10
11. Effec6ve
Peering
Range
• DefiniGon:
The
EffecGve
Peering
Range
is
the
range
of
peering
traffic
exchange
that
makes
sense
financially.
• “Sweet
Spot”
• Example
use:
“Peering
provably
makes
sense
if
we
can
freely
peer
between
3.1Gbps
and
7Gbps”
11
12. Non-‐Financial
Mo6va6ons
for
Peering
1. Low
Latency
2. Control
Over
Rou6ng
3. Redundancy
4. Aggrega6on
benefits
w/peering
and
Transit
at
IX
5. Make
more
money
with
lower
latency
and
loss
12
13. Non-‐Financial
Mo6va6ons
for
Peering
6. ISP
rela6onships-‐be
one
of
the
cool
kids
7. Marke6ng
benefits
8. Network
reliability
9. I
want
to
paid
to
travel
13
14. Challenges
with
Peering
• Network
Exper6se
Required
• Admin
startup
costs
• Peering
not
always
granted
• Greater
opera6onal
overhead
• Peering
process
may
be
slow
• Peering
may
not
be
granted
– Hence
the
Peering
Playbook
14
15. Challenges
• Challenges:
Build
into
an
IX?
(Get
used
to
the
terminology)
1. What
is
the
monthly
bill
if
you
buy
1.5Gbps
of
transit
at
$2/Mbps
and
also
peer
1Gbps
at
an
IX
with
a
total
monthly
peering
cost
of
$5000/month?
1500Mbps*$2/Mbps=$3K+$5K=$8K
2. You
have
5
Gbps
of
video
traffic
to
push
and
your
price
of
transit
is
$2
per
Mbps
with
a
2G
commit.
Does
it
make
sense
to
build
into
Sean’s
Internet
Exchange
if
the
circuit
in
costs
$3000/mo,
colo
costs
$1000/mo,
the
10Gbps
peering
port
costs
$3000/mo
and
you
think
you
can
peer
away
2Gbps
for
free
at
the
IX?
$3K+$1K+$3K=$7K
No:
Transit
is
cheaper@
$2/Mbps
Peering:
=$3.50/Mbps
2000Mbps
3.
You
have
3
Gbps
of
video
traffic
to
push
and
you
just
started
a
two-‐year
contract
paying
transit
fees
of
$2
per
Mbps
with
a
2G
commit.
Does
it
make
sense
to
build
into
Abel’s
Internet
Exchange
if
you
can
peer
2Gbps
away
for
free
with
the
only
cost
being
port
costs
at
$2500/mo
for
a
10
gig
port?
No,
you
are
s6ll
on
the
hook
for
2Gbps*$2/Mbps=$4000,
adding
in
the
$2500
for
the
peering
port
puts
you
at
$6500/month!
Cheaper
to
just
send
all
3Gbps
through
transit.
15
